CAPE TOWN (Scrap Monster): In a ‘game-changer' deal, mining major Rio Tinto has signed a landmark deal with the Guinea government over $20 billion development of Simandou iron ore deposit. The agreement was signed by Sam Walsh, CEO, Rio Tinto and Alpha Condé, President of Guinea on Monday.

According to officials, the tentative timeline for first production is now set at end-2018.

The Guinea government will have 7.5% stake in the project. Further all ore exported from Guinea will be subject to payment of 3.5% government royalty. The miner will be exempted from income tax for eight years once fully operational. The port and rail assets at the mine would be transferred to the government after 30 years of operation.

Rio's other project partners are Aluminum Corp. of China Ltd., and the World Bank owned International Finance Corp.

The agreement covers only two of the four mining permits in the Simandou region. The ownership of the rest of the resource is still in dispute.

Simandou is a 110 km long range of hills located in South Eartern Guinea, whose southern end is said to be the world's largest untapped iron ore resource. The mine is expected to produce nearly 100 MT of ore per annum. The expected mine life is 40 years.